Yes, I know that Hercules performed 12 labours. But he also had a heck of a lot more time to complete them. The Greek strongman, laggard that he was, took a year just to chase down the Ceryneian Hind. Then again, he didn’t have shareholders.

The new head of Barclays is taking a long, hard look at the struggles ahead

Jenkins

Antony Jenkins, who will (probably not) celebrate his first 100 days in charge of Barclays this coming weekend, has only until the bank’s strategy day on February 12 to fine-tune the programmes he has dubbed Transform – short for Turnaround, Return Acceptable Numbers, Sustain Forward Momentum – and Project Mango, a review of the investment bank.

There has been a great deal of talk in recent weeks about Jenkins taking an axe to the former empire of his predecessor Bob Diamond. But those who advocate cutting the investment bank down to size need to overcome two inconvenient truths.

The first can be found at the bottom of page five of the bank’s third-quarter report: in the first nine months of 2012 the investment bank made pre-tax profits of £3.2bn, compared with £2.7bn for retail and business banking, Barclaycard, and wealth and investment management combined.

The second is that shrinking investment banks is harder than it sounds. Just ask Stephen Hester and John Hourican at Royal Bank of Scotland or, in a few months time, Sergio Ermotti, Andrea Orcel and (if he’s still at UBS) Carsten Kengeter.

Jenkins’ strategy must strike a delicate balance – more akin to taming Diomedes’ horses than lopping off the hydra’s heads. He must find a way to convince shareholders that the bank is a sustainable bet without spooking clients or irreversibly damaging the bank’s core strengths. It will be a struggle alright.

Managing the balance sheet

The move from Basel 2.5 to Basel III hurts Barclays more than any other bank of its ilk. If Jenkins decides to shrink risk-weighted assets (as he surely must) and equity can be released without hurting profits then, according to Raul Sinha, a UK banks analyst at JP Morgan, Barclays should be able to achieve a chunky increase to its return on equity.

But this is a really fine balance. Under-club the RWA mitigation exercise and the balance sheet will continue to act like an anchor on the bank’s share price – one of the reasons that, despite a post-Diamond surge in the share price, Barclays still has a price-to-book value of less than 0.5. Over-club it and the bank’s first-class fixed-income franchise may take a hit.

FICC

It has been a good year to have a strong fixed-income, commodities and currencies business, especially in the (normally quieter) third quarter, when revenues rose by 11% in dollar terms across the industry compared with the previous three months. Barclays has a great FICC business. But its revenues from that division fell by 20%.

The best-case scenario is that this was a short-term blip caused by the fallout from the Libor scandal. The danger is that it will add ammunition to those pressurising the management team into “doing a UBS”, costs and RWAs get cut too deeply and the flow monster is fatally wounded.

Equities and M&A

Andrew Lim, a banks analyst at Espirito Santo, believes Jenkins may be tempted to try and scale up in equities and investment banking businesses.

This would almost certainly be a mistake. In the first nine months of this year, Barclays made revenues of £5.9bn in FICC but only £1.5bn in equities and £1.5bn in investment banking.

Investment banks only have a future in businesses when they have a demonstrable edge and track record. Those bankers who still don’t get this haven’t been paying attention. It could be worth persevering with the progress Barclays has made in M&A to augment debt advisory.

It’s a UK house and needs a UK equities capability. But the case for preserving equities in Europe and Asia is less strong.

The US

Barclays is good at equities in the US. And it is on the other side of the Atlantic that Jenkins finds himself firmly impaled on the horns of a dilemma. Barclays is one of only two European banks (the other being Deutsche Bank) that has a strong franchise in the US, thanks to its acquisition of the domestic operations of Lehman Brothers.

But Jenkins will have to pay top whack to keep his US bankers happy or risk seeing his foothold in this crucial market crumble. That’s going to be tricky to square with one of the first commitments he made on ascending to the top seat: namely to tackle compensation at Barclays, which he has said will be tied to societal goals.

Ring-fencing

Another thorny one. Should Jenkins preempt both the recommendations of Sir John Vickers (UK) and Erkki Liikanen (EU) and ring-fence the investment bank? This too will require laser-guided implementation. If he sets the ring-fence too tight, the funding costs for the investment bank will shoot up; too loose, and uncertainty over future regulatory demands will continue to weigh on the bank.

‘Toxic’ businesses

Appearing before the UK’s Parliamentary Commission on Banking Standards last week, Rich Ricci, the head of Barclays’ corporate and investment bank, gave a strong hint that the bank might pull out of soft commodities trading because “it doesn’t sit socially well with the large constituent of our customers”.

That could equally apply to the bank’s controversial tax advisory business which, in PR terms, is the banking equivalent of the Augean stables. Annoyingly for Jenkins, it is probably (the bank doesn’t break out the figures, so we don’t know for sure) very profitable.

Asset gathering and post-trade

Several of Barclays’ peers, including UBS and JP Morgan, have restructured their business around their two main client segments – investors and companies. Barclays’ big FICC business means it is skewed towards the former.

But, because it sold Barclays Global Investors in 2009, it doesn’t have a big captive audience like UBS. And because it lacks JP Morgan’s custody business it doesn’t have strength in all those increasingly important post-trade services such as clearing, collateral management and fund administration. With other banks tooling up in this area, that could become a big problem and one that only an acquisition would solve.

But selling that to shareholders would be trickier than anything Hercules had to take on.